Imported seafood sales surge at leading Chinese e-commerce store

Overall online seafood sales for the Beijing-headquartered company, which competes head to head with Alibaba’s Tmall and is considered one of the largest business to consumer e-commerce retailers in China, increased 11-fold.

This is according to Max Cao, global sourcing and investment general manager for JD’s fresh foods segment, who was on a panel discussion at the Asia Responsible Seafood roundtable, held during this year’s Seafood Expo Global in Brussels, Belgium, in April.

The rapid growth, although from a low base, follows a massive expansion of JD’s online seafood offering.

Undercurrent News checked the company’s fresh food site (fresh.jd.com) on May 17 and 237 pages of products, with 50 items per page, came up as matching the seafood category.

This means currently Chinese customers can choose from nearly 12,000 seafood SKUs. Since seafood sales on fresh.jd.com started around January 2015, this amounts to an average of 14 new seafood listings per day.

Products on sale include imported seafood from five continents.

JD — which is sometimes referred to as Jingdong and was formerly called 360buy — declined to confirm to Undercurrent the number of seafood SKUs available on its site.

However, Cao said the company expects seafood sales to continue to grow at the high rates it has seen so far.

“The reason why we believe the growth chain will continue, is because of two things: the Chinese consumer has much more money, and they are demanding high quality seafood,” Cao said, at the roundtable event.

“Furthermore, right now in China we can deliver our side of the bargain thanks to improving infrastructure to deliver seafood.”

Chinese consumers like the greater variety of seafood afforded from overseas, he added.

Rapid growth

JD has 266 million active users and the largest logistics network of any e-commerce company in China. In 2016, JD’s share of China’s business to consumer (B2C) market rose to 25%, up from 18% at the end of 2014, according to The Economist.

JD’s range of imported seafood products include oysters from France, salmon from Norway, and lobster from Boston, according to Cao. From Undercurrent’s own research, other imports include red shrimp from Argentina, white shrimp from Ecuador, clams from Canada, and salmon roe from Russia.

During the panel discussion in Brussels, which was supported by Aquaculture Stewardship Council and focused on China, Cao reiterated that Chinese online platforms are good for foreign companies – and sustainability organizations — looking to promote their brands and awareness.

“MSC [Marine Stewardship Council] is a new concept [in China], so there is a lot to learn…. we can tell the MSC story,” he said.

“MSC is a new concept [in China], so there is a lot to learn… we can tell the MSC story”

Canadian fishing firm Clearwater Seafoods listed its clams and lobsters on JD last year. It has its own store and product pages for its clams and lobster (here and here). The pages include information on everything from brand and company history, to pictures and descriptions of harvesting, and processing and transportation methods.

The firm has also uploaded images of hygiene and sourcing documentation. There is also a video of local Chinese chefs cooking Clearwater’s Canadian lobster.

Clearwater also sells its products on Alibaba’s Tmall through its own Tmall store, as well as on Mr Fresh. The latter is Alibaba’s fresh food e-commerce offering, also hosted on Tmall.

In the first quarter of this year, Clearwater’s total sales in China were up 26% year-on-year. Today, China is Clearwater’s largest single market, according to an analysis by Canadian investment dealer Beacon Securities

“We believe that China will continue to dominate Clearwater’s growth for the foreseeable future as the spending power of the Chinese emerging middle class drives demand,” wrote Doug Cooper, an analyst with the firm.

“We believe that China will continue to dominate Clearwater’s growth for the foreseeable future as the spending power of the Chinese emerging middle class drives demand”

Domestic seafood products on sale include Chinese vannamei and tilapia from Zhanjiang Guolian Aquatic Products, and sea cucumbers and scallops from Zoneco Group, China’s two largest market-listed seafood companies.

Cao noted interesting new value-added products include microwaveable Chinese crayfish, which one company produces in 40 different flavors, including garlic, vanilla and green tea, he said.

Growth at a cost?

The growth of seafood in Chinese retail hasn’t been all smooth sailing, however, with the quality of the cold chain one particular challenge.

In October of last year, media reports told of seafood sold on JD being delivered to customers in poor conditions. Similar complaints were made of seafood sold on Alibaba’s B2C platform Tmall, including Clearwater products sold via Clearwater’s own Tmall store.

Even in large cities like Guangzhou and Shanghai, where logistics is best, customers claimed to receive seafood products 48 hours after ordering. With some products sold live (oysters, lobsters, dungeness crab), this raised the likelihood products arrived dead.

Indeed, this was among the complaints.

JD may have stretched itself too thin. According to Undercurrent research, the vast majority of seafood products sold on JD are sold by third parties, most of whom fulfill deliveries themselves akin to traders on Amazon Marketplace.

One such trader is Beijing-based Laurel International Trade Co. The company has its own store on JD and sells lobsters and clams marketed with Clearwater branding (here).

Laurel International Trading Co listing of Clearwater-branded lobsters on JD.com. Laurel International also sells oysters marketed as Gillardeau oysters, a prized variety of French oysters known to be counterfeited. In 2014, the family run firm resorted to laser-engraving shells with its brand mark in a bid to thwart counterfeiting.

Clearwater did not respond to email or telephone messages requesting clarification about its relationship with Laurel International.

Furthermore, although JD has invested heavily in logistics, a Rabobank presentation at the Global Seafood Market Conference in California in January noted that China’s cold chain capacity is “still lagging”.

At around 0.07 cubic meters of capacity per citizen, China’s cold chain capacity is less than India’s. It is also far behind the US, which has 0.35 cubic meters per citizen, said the bank (see chart 1).

Recently, Li Keqiang, China’s premier, reportedly lamented that it is sometimes easier to ship goods to the US than within China.

Rabobank estimates China’s refrigerated transport and warehousing capacity is growing each year by 26% and 17% respectively (see chart 2).

And as part of China’s 2016-2020 five-year economic plan, the government has pledged to spend $2 trillion on transport infrastructure by 2020, reportsChina Daily.